[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
REAUTHORIZATIONl OF THE BROWNFIELDS PROGRAM SUCCESSES AND FUTURE
CHALLENGES
=======================================================================
(109-77)
HEARING
BEFORE THE
SUBCOMMITTEE ON
WATER RESOURCES AND ENVIRONMENT
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
JUNE 8, 2006
__________
Printed for the use of the
Committee on Transportation and Infrastructure
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
DON YOUNG, Alaska, Chairman
THOMAS E. PETRI, Wisconsin, Vice- JAMES L. OBERSTAR, Minnesota
Chair NICK J. RAHALL, II, West Virginia
SHERWOOD L. BOEHLERT, New York PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee ELEANOR HOLMES NORTON, District of
WAYNE T. GILCHREST, Maryland Columbia
JOHN L. MICA, Florida JERROLD NADLER, New York
PETER HOEKSTRA, Michigan CORRINE BROWN, Florida
VERNON J. EHLERS, Michigan BOB FILNER, California
SPENCER BACHUS, Alabama EDDIE BERNICE JOHNSON, Texas
STEVEN C. LaTOURETTE, Ohio GENE TAYLOR, Mississippi
SUE W. KELLY, New York JUANITA MILLENDER-McDONALD,
RICHARD H. BAKER, Louisiana California
ROBERT W. NEY, Ohio ELIJAH E. CUMMINGS, Maryland
FRANK A. LoBIONDO, New Jersey EARL BLUMENAUER, Oregon
JERRY MORAN, Kansas ELLEN O. TAUSCHER, California
GARY G. MILLER, California BILL PASCRELL, Jr., New Jersey
ROBIN HAYES, North Carolina LEONARD L. BOSWELL, Iowa
ROB SIMMONS, Connecticut TIM HOLDEN, Pennsylvania
HENRY E. BROWN, Jr., South Carolina BRIAN BAIRD, Washington
TIMOTHY V. JOHNSON, Illinois SHELLEY BERKLEY, Nevada
TODD RUSSELL PLATTS, Pennsylvania JIM MATHESON, Utah
SAM GRAVES, Missouri MICHAEL M. HONDA, California
MARK R. KENNEDY, Minnesota RICK LARSEN, Washington
BILL SHUSTER, Pennsylvania MICHAEL E. CAPUANO, Massachusetts
JOHN BOOZMAN, Arkansas ANTHONY D. WEINER, New York
JIM GERLACH, Pennsylvania JULIA CARSON, Indiana
MARIO DIAZ-BALART, Florida TIMOTHY H. BISHOP, New York
JON C. PORTER, Nevada MICHAEL H. MICHAUD, Maine
TOM OSBORNE, Nebraska LINCOLN DAVIS, Tennessee
KENNY MARCHANT, Texas BEN CHANDLER, Kentucky
MICHAEL E. SODREL, Indiana BRIAN HIGGINS, New York
CHARLES W. DENT, Pennsylvania RUSS CARNAHAN, Missouri
TED POE, Texas ALLYSON Y. SCHWARTZ, Pennsylvania
DAVID G. REICHERT, Washington JOHN T. SALAZAR, Colorado
CONNIE MACK, Florida JOHN BARROW, Georgia
JOHN R. `RANDY' KUHL, Jr., New York
LUIS G. FORTUNO, Puerto Rico
LYNN A. WESTMORELAND, Georgia
CHARLES W. BOUSTANY, Jr., Louisiana
JEAN SCHMIDT, Ohio
(ii)
Subcommittee on Water Resources and Environment
JOHN J. DUNCAN, Jr., Tennessee, Chairman
SHERWOOD L. BOEHLERT, New York EDDIE BERNICE JOHNSON, Texas
WAYNE T. GILCHREST, Maryland JOHN T. SALAZAR, Colorado
VERNON J. EHLERS, Michigan JERRY F. COSTELLO, Illinois
STEVEN C. LaTOURETTE, Ohio GENE TAYLOR, Mississippi
SUE W. KELLY, New York BRIAN BAIRD, Washington
RICHARD H. BAKER, Louisiana TIMOTHY H. BISHOP, New York
ROBERT W. NEY, Ohio BRIAN HIGGINS, New York
GARY G. MILLER, California ALLYSON Y. SCHWARTZ, Pennsylvania
HENRY E. BROWN, Jr., South Carolina EARL BLUMENAUER, Oregon
BILL SHUSTER, Pennsylvania ELLEN O. TAUSCHER, California
JOHN BOOZMAN, Arkansas BILL PASCRELL, Jr., New Jersey
JIM GERLACH, Pennsylvania RUSS CARNAHAN, Missouri
TOM OSBORNE, Nebraska NICK J. RAHALL, II, West Virginia
TED POE, Texas ELEANOR HOLMES NORTON, District of
CONNIE MACK, Florida Columbia
LUIS G. FORTUNO, Puerto Rico JOHN BARROW, Georgia
CHARLES W. BOUSTANY, Jr., JAMES L. OBERSTAR, Minnesota
Louisiana, Vice-Chair (Ex Officio)
JEAN SCHMIDT, Ohio
DON YOUNG, Alaska
(Ex Officio)
(iii)
CONTENTS
TESTIMONY
Page
Bodine, Hon. Susan Parker, Assistant Administrator, Office of
Solid Waste and Emergency Response, U.S. Environmental
Protection Agency, Washington, D.C............................. 11
Magill, John M., Deputy Director, Ohio Department of
Development, Columbus, Ohio.................................... 11
Manning, Terry, Senior Planner and Brownfields Coordinator,
South Florida Regional Planning Council, Hollywood, Florida.... 11
Meyer, Peter B., Director of Applied Research, Institute for
Public Leadership and Public Affairs, Northern Kentucky
University, Highland Heights, Kentucky......................... 11
Philips, Jonathan, Senior Director, Cherokee Investment
Partners, Raleigh, North Carolina.............................. 11
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Carnahan, Hon. Russ, of Missouri................................. 46
Costello, Hon. Jeffry F., of Illinois............................ 47
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Bodine, Hon. Susan Parker....................................... 32
Magill, John M.................................................. 49
Manning, Terry.................................................. 55
Meyer, Peter B.................................................. 65
Philips, Jonathan............................................... 77
SUBMISSION FOR THE RECORD
Bodine, Hon. Susan Parker, Assistant Administrator, Office of
Solid Waste and Emergency Response, U.S. Environmental
Protection Agency, Washington, D.C., responses to questions
from Rep. Pascrell............................................. 42
ADDITION TO THE RECORD
U.S. Conference of Mayors, Cherokee Investment Partners, LLC,
International City/County Management Association, International
Council of Shopping Centers, Local Initiatives Support
Corporation, National Association of Industrial & Office
Properties, National Association of Local Government
Environmental Professionals, Northeast-Midwest Institute, The
Trust for Public Land, letter, June 8, 2006.................... 86
REAUTHORIZATION OF THE BROWNFIELDS PROGRAM--SUCCESSES AND FUTURE
CHALLENGES
----------
Thursday, June 8, 2006
House of Representatives, Committee on
Transportation and Infrastructure, Subcommittee
on Water Resources and Environment, Washington,
D.C.
The subcommittee met, pursuant to call, at 10:00 a.m., in
room 2167, Rayburn House Office Building, Hon. John J. Duncan,
Jr. [Chairman of the subcommittee], presiding.
Mr. Duncan. I want to first welcome everyone to our hearing
today on the reauthorization of the Brownfields Program at the
Environmental Protection Agency.
As manufacturing and commercial companies relocate or close
their operations, they sometimes leave behind abandoned
factories, salvage yards, and warehouses. Some of these sites
may contain residual contamination with hazardous substance or
other pollutants. These potentially contaminated former
industrial and commercial sites are the brownfields that are
the subject of our hearing today.
Brownfields drive down property values and tax revenues,
and are a major blight in many of our cities and towns. There
are hundreds of thousands of brownfields sites in America.
While some of them exist in rural areas, most are in our
cities, close to highways, rail lines, and ports. They are
prime locations for redevelopment except for the fact that the
land may be contaminated.
In the past, no one wanted to invest in cleaning up these
sites because they feared the environmental liability under
statutes such as the Comprehensive Environmental Response,
Compensation, and Liability Act, also known as Superfund. As a
result, many developers turned to undeveloped green spaces for
new investments.
It became clear that it made good economic and
environmental sense to remove legal hindrances and support
State, local, and private efforts to clean up and redevelop
brownfields. So, through this Committee's efforts, Congress
passed, and the President signed, the Small Business Liability
Relief and Brownfields Revitalization Act. That law provided
legislative authority for the Brownfields Program, including
grants for site assessments and cleanup. The law also clarified
liability associated with brownfield sites and helped provide
greater protections for innocent parties who want to clean up
and redevelop brownfields properties.
Title II of the legislation was the Brownfields
Revitalization and Environmental Restoration Act of 2001, which
authorized $200 million per year for Brownfields Program grants
and $50 million per year to support State and tribal response
programs. The grants are issued by EPA each year to communities
and tribes for site assessments and revolving loan funds and
direct cleanups.
With the help of these grants and the law's liability
protections, communities can transform eyesores into safe and
clean lands for new businesses, residences, public parks, or
green space. The EPA estimates that the Brownfields Program has
leveraged more than $8.2 billion in private investment and
helped create more than 37,000 jobs. In addition, cleaning up
brownfields may help control urban sprawl by making former
industrial and commercial sites available for new development,
thereby taking some of the pressure off undeveloped natural
areas on the outskirts of cities.
I think the Brownfields Program has been a very successful
government program, but like any good program, there may be
ways to make it better. The authorization for appropriations
for the Brownfields Program will expire this year. As we
consider reauthorization of the Program, we should look for
opportunities to make improvements. Turning brownfields back
into usable property involves the efforts of the Environmental
Protection Agency, State and local governments, private
investors, and non-governmental organizations.
We have assembled a panel of experts from each of these
entities who will help us understand how this program has been
working and how we might want to improve it. I appreciate all
of the witnesses taking time from their very busy schedules to
be here with us this morning, and I look forward to hearing
their testimony.
Now let me turn to my good friend, the Ranking Member of
the Subcommittee, Ms. Johnson, for her opening statement.
Ms. Johnson. Thank you very much, Mr. Chairman. This
morning the Subcommittee meets to hear testimony on the
successes and future challenges of the Environmental Protection
Agency's Brownfields Program and reauthorization of the
Brownfields Revitalization and Environmental Restoration Act of
2001.
I have a deep appreciation for our subject matter this
morning, as I have been able to witness firsthand the many
positive effects brownfields redevelopment affords. In the
heart of my congressional district and less than four blocks
from my district office lies a 65 acre site known as the
Victory Corridor. Less than five years ago, the former rail
yard and utility site and an old abandoned packing house
existed as a contaminated brownfield.
However, thanks to the assistance of the State's voluntary
cleanup program and the partnership with EPA, the City of
Dallas and a private developer, the inner city property has
been completely remediated and placed back on the city's tax
rolls. The 65 acre site is now home of the American Center and
home of my beloved Dallas Mavericks, and a mixed use
development project that has transformed a formerly
economically depressed area into a dynamic one.
With results like these, it is no surprise that the
Brownfields Program commands bipartisan enthusiasm and support.
Conceived and initiated in the Clinton administration and
legitimately enacted in the Bush administration, the program
has proven to be a necessary catalyst in revitalizing
underutilized sites and preserving undeveloped areas.
Brownfields redevelopment programs are critical to our
Nation's communities to grow stronger and smarter, while
allowing them to recycle our Nation's land to promote continued
economic growth and a cleaner environment. As President Bush
said when signing the Small Business Liability and Relief and
Brownfields Revitalization Act, this is a good jobs creation
bill.
Congress authorized, and the President supported, a funding
level of $200 million annually for the site assessment cleanup
efforts. Yet, the consistent and dramatic underfunding of the
Brownfields Program by the President and the Congress leave
much to be desired in terms of corresponding appropriations. In
fact, the appropriations for brownfields assessment cleanup
peaked at $97.7 million in fiscal year 2002, and only $89
million in this year's House passed appropriations bill.
Last year, EPA received 656 proposals for funding that
passed its threshold requirements for eligibility.
Unfortunately, EPA did not fund 55 percent of these proposals.
Historically, EPA funds only about one-third of the requests. A
fully funded program could fulfill nearly all of these
proposals. EPA purports that the Brownfields Program has
leveraged more than 37,000 jobs, yet the program has never
received even one-half of its authorized funding.
With job creation in the most recent quarter falling well
behind expectations, one can only speculate what effect a fully
funded program could have on the job market and the economy at
large. Unfortunately, this appears to be another program where
great promise is being left unfilled by inadequate funding.
Mr. Chairman, I look forward to the testimony of our
witnesses, and I want to thank you for being here. As evidenced
by the GAO's sheer number of estimated brownfields throughout
the Country, there is a clear and evident need for a strong
flexible, accountable, and adequately funded Brownfields
Program. The time has come to renew our resolve and desire
toward stimulating growth across our Nation, and as we can
begin by recognizing, targeting, and cleaning up the more than
500,000 estimated brownfields across America, when left only,
only frustrate the plans and hopes for our communities and
neighborhoods.
Thank you, Mr. Chairman. I yield back.
Mr. Duncan. Thank you very much.
Mr. Gilchrest.
Mr. Gilchrest. Thank you, Mr. Chairman. I appreciate the
hearing and all the witnesses that are here today to give us
some insight into creating--I don't want to use the word
``expanding,'' because people don't like to expand Federal
programs necessarily, but the idea that we can get into this
program, look at some ingenious ways to make it work better on
the local level by creating and continuing this partnership
between the Federal Government and the local level, and the
idea that the potential that we could use besides assessments,
but demolition can be included into the process of
understanding how we can make better use of brownfields.
The fundamental issue here, though, I think, Mr. Chairman,
is that we are going to create a program where there are other
options. You don't have to take the ag land, you don't have to
take the open space. Let us make that connection between the
local government, who has, really, virtually total authority
over land use decisions, and create various options that they
can think about.
So we are creating options, offering opportunities for
human thinking, the thought process, which we don't always have
that much of any more because of Blackberries and strawberries
and whatever you call those things, and cell phones and all
these other things. Just to sit back, creating options, time to
think about it so we can make much more valuable use out of
this Federal program.
Thank you.
Mr. Duncan. Thank you very much.
Mr. Pascrell.
Mr. Pascrell. Thank you, Mr. Chairman and Ranking Member.
Mr. Chairman, I am puzzled as to why we have not moved on this
legislation, certainly through no loss of efforts on your part
and the Ranking Member. You have been out front on water
resources and on the issue of brownfields. You have been out
front on the issue of sewer separation, SEOs, not sexy topics
to talk about, but these are issues that municipalities
throughout the United States struggle with day in and day out,
and you have been strong on these issues.
Brownfields legislation costs money, but the data and the
science all show that this is a true economic stimulant. Jobs
are created when this partnership moves forward in a forceful
manner. Property that has been abandoned for many, many years
that we drive by, an old city that I am from in New Jersey
comes to life; people live there, people work there. And when I
have to make a comparison, this is the kind of comparison I am
making, judgment or not. And I am sure you wouldn't agree with
the comparison, but, nonetheless, this is the one I make.
If I have to make a judgment into putting more money into
this program that has worked, as Clean Air Act has worked, as
Clean Water Act has worked, if I have to make a comparison and
a judgment between doing that and giving a tax cut to Jason
Giombi and Barry Bonds, it is a very easy decision for me,
because there is absolutely no scientific evidence that the tax
cuts to those people making more than $1 million have anything
to do with job creation in the United States. And you can
pontificate all you want, I have not seen any evidence to that
effect. But I have seen evidence, I have seen evidence on this
issue.
Now, all of these pieces of land throughout the United
States of America add up to about 200,000 acres, so this is
pretty significant. If there were 200,000 acres on fire in
California this afternoon, there would be a major problem
there. These pieces of property are literally on fire. They are
not only barren, they are not only barren, but they may be
causing major problems to the very aquifer health system within
the community. And they are not giving anybody a place to live,
particularly in densely populated areas, and they are not
giving opportunities for people to work; and in certain parts
of the Country, that is a major interest as well.
So we have these 1200 brownfield sites. In my district
alone, there are 1200 sites. Twelve hundred sites. My district
covers two northern New Jersey counties. And, as I said, they
are abandoned. They have been often industrial properties. In
my district, this is the oldest industrial area in the entire
Nation, ourselves, as well as Lowell, Massachusetts.
Hazardous substances generated from many years of
industrial activities contaminate these properties. As a former
mayor, I can tell you that redevelopment is the only type of
growth that is possible any longer in our urban communities.
Even though our industrial base has changed over time, and we
have debated that in other areas, since we have given away our
infrastructure, our manufacturing infrastructure.
We have surrendered it to the other side, to the other
ocean or to that ocean. We have surrendered it under the belief
that service jobs would supplant it. And where in God's name is
the evidence for that? Particularly service jobs that we do
create create jobs that pay far less money and provide less
benefits. Ah, there is the twist. That sounds good in our
efforts to protect the American worker.
So even though our industrial base has changed, these
properties in the district I am referring to, the 8th district
in New Jersey--and it could be said for any district--they are
valuable assets.
And this is exactly how you have looked at it, Mr.
Chairman, as a valuable asset. What do we do with that asset
even though it may be a tainted asset, even though there may be
some problems with that particular public asset? It could be a
public asset even though it might be some of these properties
are privately owned.
And it has the potential to become magnets for the
revitalization of our cities. Nobody ever talks about our
cities any longer. Have you heard either side of the aisle,
Democrats or Republicans, talk about the major cities of this
Country? My party doesn't talk about it, in our attempt to be a
global party, in our attempt not to be a fringe party. We don't
talk about it anymore either. So everything must be wonderful
in the cities of America, just moving along here.
Brownfields development can have a multitude of positive
effects on these most troubled areas of our Country, where most
of the people live. Oh, yeah, I forgot about that. They can
help to create jobs; they can improve the quality of the
environment; they can spur smart growth and preservation of
open space. There are so many success stories from our cities
and suburbs that are being heard across the Country.
The $250 million annually that we authorized; we know how
much we appropriate. We don't do what we say, Mr. Chairman. And
you have done everything in your power. You have even had sweat
on your brow. And I wonder how, when you go home at night, what
you think about all the effort that you put in sincerely and
then the result, and then have to deal with the magnitude of
irrelevant materials that we vote on in the Senate or the
House. At this current funding level, Mr. Chairman, only about
one-third of the eligible applicants can receive any money at
all, and that is why I am mostly concerned.
So I want to just end, if you may, if you give me the
luxury. I have three questions just to throw out which I think
are significant to the discussion today, and if you would allow
me to provide those questions:
What about allowing communities to apply for assessment and
cleanup grants with one application, less paperwork, and mean
it?
And should the Congress consider making it easier for
communities to apply for cleanup for properties that they do
not yet own at the time of the application? I think that would
be helpful, but what do you think?
And would making assessment grants, in addition to cleanup
grants, available to private non-profit entities, in addition
to municipalities, be beneficial in terms of encouraging
additional redevelopment of brownfields?
Mr. Chairman, thank you for your courtesies.
Mr. Duncan. Well, Mr. Pascrell, thank you very much. I can
tell you that I spent five and a half seasons as bat boy for a
minor league baseball team. I worked the first season and a
half for free and the next four seasons for $1.50 a game. I can
assure you that I have never once worried about Jason Giombi or
Barry Bonds, or their salaries. And I can tell you that I am
not concerned at all about giving them tax cuts, but I am
concerned about trying to do something with this very small
program.
But I liked your statement so much I have allowed you give
the longest statement that has ever been made in this
Subcommittee, I believe.
[Laughter.]
Mr. Duncan. Thank you very much.
Mr. Miller.
Mr. Miller. Thank you, Mr. Chairman. And, Chairman Duncan,
I really appreciate your hosting this hearing today. This is an
issue. I have been a developer for 35 years. It is really,
really important, being a former mayor. The cleanup and
redevelopment of brownfield sites is really pretty important in
most every community we face out there.
The reports I have read, it appears that there is easily
over 450,000 brownfield sites throughout this Country, and they
are basically there because of contaminated products that were
produced on their chemical compounds or hazardous substances
that were used on the property have left them where they are
at. And they really represent more than just eyesores to these
communities; they threaten their groundwater supply, they cost
local communities jobs and revenues.
And they do, in some way, attribute to urban sprawl because
we have sites within communities that have infrastructure in
place that would accommodate various uses, whether it be a
community center, a park, you know, apartments, condominiums,
homes, commercial, whatever, that are not being utilized, they
are just sitting there; and we are taking and advancing
development in areas that really don't have the infrastructure
necessary like some of these brownfield sites do.
To build their economies and attract employers, increasing
numbers of States and local governments are working to clean up
and redevelop these sites. The largest obstacle they face in
many cases is a lack of capital needed up front to cover the
essential early stage activities such as site assessment,
remediation planning, and actual cleanup of the sites. Private
financiers really are unwilling, in many cases, to put the
money forward to do that, to take the project through full
recycling and redevelopment stages. Local municipalities and
local leaders find themselves confronted with this complex task
of redevelopment because of a lack of funding.
As we work on this EPA Brownfields Program, I think it is
important to ensure the Program focuses on assessing and
cleaning up brownfield sites. Some advocate that the EPA
Brownfields Program should include economic development, which
HUD is doing currently, and I really have a problem with that.
I mean, you approach a cleanup from a different perspective
than HUD approaches it. HUD looks at redevelopment on the
development side, and they look at redevelopment, they look at
economic issues and how to basically go in and help communities
up front with early stage funding to get the planning and those
type of things going.
Some have tried repeatedly to eliminate the funding for the
BEDI Program and look at funding that through EPA, and I think
Congress, in recent years, has made a very strong statement. We
have expressed an overwhelming support for the BETI Program in
this last year's program by including funding to allow the
important program to continue. The House unanimously passed an
amendment during floor consideration in favor of funding for
the BEDI Program, and last year, on December 13th, they
approved H.R. 280, which is the bill I introduced to
reauthorize HUD's Brownfields Redevelopment Program.
The fact that EPA does not specialize in economic
redevelopment and the responsibility should not be brought to
take on that role. I think what you are doing right now is an
area you have expertise in; I don't think economic development
is necessarily where your expertise are at. I don't believe
that EPA and HUD's Brownfield Programs should be consolidated;
I think there is a place for each of those. Each agency serves
a unique purpose for redevelopment of brownfields in our
Nation's communities.
Mr. Chairman, as we look to reauthorize the EPA program, I
would really encourage you and ask you to take into
consideration the fact that HUD's goals on brownfields are
different than EPA's goals on brownfields, and you are both
doing a good job. So my talk today is not in any way to impugn
you on what you are doing, because what you do is worthwhile,
and it is a great endeavor and we need to expand that.
But HUD looks at EPA, what you do, from a different
perspective on their Brownfields Program. Theirs is just dealt
with through the BETI Grant Program to be able to empower local
agencies to take and be able to partnership with either private
developers through redevelopment areas and take and stimulate
economic growth within a community.
So I know the Administration keeps zeroing out the BEDI
Program through HUD, but I think we haven't emphasized the
ability to use BEDI like we should. In fact, I have been
strongly advocating simplifying the program because they
require now you go get a Section 108 loan, then you pledge your
CDBG funds for repayment.
And, as you know, in most communities, CDBG funds are one
of the most usable funds they have to give to communities,
whether it is Meals on Wheels, YMCAs, other programs that these
communities really need funds for. These programs are really
utilized for those. So a lot of communities don't want to
pledge those funds, and unless you are a direct recipient of
it, which most communities aren't, you can't pledge something
you don't receive other than getting it through the county or
such.
So we have actually complicated the BEDI Program, where it
is not working as it should. I think we need to simplify the
program. But what I don't want to do is mix two programs that
have different objectives, when we want to encourage you to
expand what you are doing. And you have to admit you have a
different focus than HUD does.
And so, Chairman Duncan, I wish you would look at this. And
we seem to be arguing this every year, and we shouldn't be
arguing it because we are all trying to arrive at the same
destination, thus, do good to clean up these 450 to half a
million sites we have out there, put them to better
utilization. But EPA and HUD have different purposes, and I
think we need to understand that and we need to encourage both.
So I look forward to this process completing, but, Chairman, I
would really appreciate it if you could look at this, and maybe
you and I could discuss this further, because I think there are
different objectives from different programs.
I yield back. Thank you.
Mr. Duncan. Well, you have made some good points, and we
will work on it.
Mr. Barrow is next on the minority side. You have no
statement?
Mr. Brown.
Mr. Brown. Mr. Chairman, I want to talk about the cities.
We have two cities, Charleston and North Charleston, and in
between, about several hundred acres, is a brownfield site, and
it is not a success story yet, but I think it is evolving into
a real success story. Back during the war, when we had the
shipyard, we also had an oil refinery, we had a creosote plant,
we had fertilizer plants, we had metallurgical plants. All of
these were pollutants.
And today these several hundred acres, which already has
the infrastructure, water and sewer, they have the bus routes
going by, everything is in place, but right now it is just a
brownfield. It is growing up a real distraction because it is a
connect point between the City of North Charleston and
Charleston, and you come in on I-26 and it is an eyesore.
But the innovation of the private sector and through the
brownfield legislation, a lot of good things are taking place,
and I just wanted to say that I think it is a win-win, it is a
win for urban sprawl to prevent those folks having to move away
from the city that work in the city. So I commend this program
and I certainly look forward to the reauthorization and the
continuation of reclaiming a lot of these polluted properties.
And I thank the panel for being here today.
Mr. Duncan. Thank you very much.
Ms. Schwartz.
Ms. Schwartz. Well, thank you, Mr. Chairman. I will be
brief. But I do want to just say that I look forward to the
panel's discussion and to the reauthorization. I will say that
representing Pennsylvania, I am really proud of the work we
have done in Pennsylvania. I was involved as a State senator in
the 1994 legislation, the brownfields legislation that was
passed in Pennsylvania.
I believe, really, we were leaders in setting the stage for
what was then done obviously on the Federal level, and now we
couldn't do without you I think in the cooperation that we have
seen. So it has been hugely important to the redevelopment not
only of our cities, but in some of our older towns and suburban
areas.
And, in fact, the President came to visit Conshohocken,
Pennsylvania, which is just outside my district, to tout the
enormous revitalization of an old industrial area that is now
sort of a hot spot to live, work, and dine, if I can say that.
It has really been an enormous revitalization, a great example
to what can happen when we see that kind of revitalization in
community. And I think as we have all heard already, we are
really interested in seeing more of it happen. We would like to
see more of these brownfields redeveloped, cleaned up, and to
see if we can't do that across this Country; and certainly in
parts of my district we are looking to make this happen.
I do understand that Pennsylvania has a memorandum
agreement with the EPA, our environmental department at the
State level, which does create a sort of a one-stop shop for
redevelopment. So one of my interests is how do you see that
working. I think from our point of view we are pleased with
that, that we know developers, businesses can come to us, can
come to the State level and know that they don't have to go
through a lot of extra paperwork; they are able to do it by
applying at the State level and getting those approvals, seeing
it through.
We have an enormous commitment in Pennsylvania to make this
work. So I am curious as to whether that is going on in other
States, whether it should be going on in other States. How can
we make this simpler so that more people know about it and can
use it. So I want you to talk to that, speak to that, if you
can.
And my second question would be, should we get to it later,
really has to do with what else EPA is doing, as this
redevelopment happens in brownfields, to encourage green
buildings, to encourage other kinds of energy saving
conservation efforts, to be an example. If we are putting
Federal dollars, State dollars into some of these private
developments, what else are we doing to set the stage for how
we can be doing even a better job in creating that example of
energy efficiency as well.
So I know there was a problem that did exist, that I think
I understand was just a demonstration that did talk about green
buildings on brownfields redevelopment. Why not more of that?
Did it not work? Why not move ahead with some of those other
kinds of innovations?
So I am looking forward to hearing what we have learned to
how we can do the reauthorization in a way that moves us
forward and, of course, as it always comes, the bottom line is
is funding adequate? Are we getting those dollars on the ground
to do this quickly enough to do the redevelopment, keep open
space preserved the way we would like to see it in many areas?
And the third question would be just how is this fitting
into the planning generally for some of the redevelopment in
different communities as well? As we see communities
redeveloping, are we seeing the redevelopment of brownfields,
reuse of brownfields really being a part of that, or can we be
proactive in that in suggesting that as we see some of the new
development?
So with those questions, Mr. Chairman, I look forward to
hearing the panelists and to the dialogue we will have. Thank
you.
Mr. Duncan. Thank you very much.
What we are trying to do is go in order in which members
arrived here, and that means, on our side, Dr. Boustany would
be next, Vice Chairman Boustany.
Mr. Boustany. Thank you, Mr. Chairman. I will be very
brief. I look forward to the testimony as we look at brownfield
reauthorization. And I hope one area that we can look at would
be performance measures, because I think especially in a
program that has restricted or somewhat limited resources,
performance measures are very important to make sure that we
are spending those dollars wisely. So I hope this is something
we will address perhaps during testimony or in the questioning
period.
Thank you. I yield back.
Mr. Duncan. Thank you very much.
Mr. Osborne?
Mr. Osborne. No questions, Mr. Chairman.
Mr. Duncan. Mrs. Kelly.
Mrs. Kelly. Thank you very much, Mr. Duncan. I appreciate
your having this hearing.
Brownfields aren't just in cities. I represent the entire
lower third of the drinking water reservoirs for New York City,
and there are brownfields and contaminated areas that can
present a real threat to that drinking water.
Of particular interest to me is TCE. As I know you are
aware, the health risks associated with TCE have continued to
be of significant concern for me and my constituents, and I am
really happy to see Susan Bodine here, because I know that she
understands the drag that bureaucratic structures can have on
getting information out.
But I am particularly frustrated by the lack of urgency on
the part of the EPA here in Washington to set guidelines after
studies done by the Agency in 2001 indicated there were huge
risks associated with TCE. They were more than originally
thought, and it is important that we focus on getting the
information out.
I have raised the issue with you, Mr. Chairman, in
committee hearings, in letters, and in private conversations. I
appreciate your personal interest and strong commitment to
protecting communities across the Country from public health
risks associated with water contamination. I hope that we can
continue working together in exhorting the EPA to provide my
constituents with the answers they need and they are really
anxious to have on the TCE problem.
I am deeply concerned that the Agency is going to continue
being very slow-footed in their response to this very serious
problem. As we speak, the plumes are continuing to flow toward
the reservoirs, and I am hoping, Mr. Chairman, you will agree
this issue merits a hearing in the near future.
Mr. Duncan. Well, certainly, Congresswoman Kelly, you have
raised this issue, as you mentioned, several times before, and
I can understand that, and I admire and respect your concern.
And certainly you are correct in saying that this problem of
the presence of hazardous contamination is not just in the
biggest cities, but it is in areas like yours.
The Superfund program is meant to address the issues you
have raised, and I can assure you that I will be happy to work
with you and to use the resources of this Subcommittee and our
staff to be sure that the program is working appropriately and
in a timely manner, and especially in the case of TCE
contamination in your district. But you are really doing a good
job on that area, calling attention to that problem, and I
thank you very much.
Mrs. Kelly. Thank you, Mr. Chairman. I yield back.
Mr. Duncan. All right, thank you very much. We are very
pleased and honored to have an outstanding panel of witnesses
here this morning. The witnesses will testify in the order in
which they are listed on the call of the hearing.
That means our lead witness will be a woman that we all
admire and respect, a former long-time staff director for this
Subcommittee, the Honorable Susan Parker Bodine, who is
Assistant Administrator of the Office of Solid Waste and
Emergency Response at the U.S. Environmental Protection Agency
here in Washington; Mr. John M. Magill, who is Deputy Director
of the Ohio Department of Development from Columbus, Ohio; Ms.
Terry Manning, who is the Senior Planner and Brownfields
Coordinator for the South Florida Regional Planning Council,
and she comes to us today from Hollywood, Florida; Mr. Jonathan
Phillips, Senior Director of Cherokee Investment Partners from
Raleigh, North Carolina; and Dr. Peter B. Meyer, who is
Director of Applied Research at the Institute for Public
Leadership and Public Affairs at Northern Kentucky University
in Highland Heights, Kentucky.
Thank you very much. As I have said at hearings before,
most committees give witnesses five minutes for statements. We
give six minutes here, but we ask that, in consideration of
other witnesses, that you not run over that time. So if you see
me start to wave this gavel, that means end your statement.
Your full statements will be placed in the record and you may
now begin your oral statements.
Ms. Bodine.
TESTIMONY OF THE HONORABLE SUSAN PARKER BODINE, ASSISTANT
ADMINISTRATOR, OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE,
U.S. ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, D.C.; JOHN M.
MAGILL, DEPUTY DIRECTOR, OHIO DEPARTMENT OF DEVELOPMENT,
COLUMBUS, OHIO; TERRY MANNING, SENIOR PLANNER AND BROWNFIELDS
COORDINATOR, SOUTH FLORIDA REGIONAL PLANNING COUNCIL,
HOLLYWOOD, FLORIDA; JONATHAN PHILIPS, SENIOR DIRECTOR, CHEROKEE
INVESTMENT PARTNERS, RALEIGH, NORTH CAROLINA; AND PETER B.
MEYER, DIRECTOR OF APPLIED RESEARCH, INSTITUTE FOR PUBLIC
LEADERSHIP AND PUBLIC AFFAIRS, NORTHERN KENTUCKY UNIVERSITY,
HIGHLAND HEIGHTS, KENTUCKY
Ms. Bodine. Thank you, Mr. Chairman, Ranking Member
Johnson, and members of the Subcommittee. I am very pleased to
be here today to talk about EPA's Brownfields Program.
As this Subcommittee well knows, policymakers began to
focus on the issue of brownfields redevelopment about 12 or 13
years ago. The U.S. Conference of Mayors was actually the first
to bring this matter to my attention, and they pointed out, as
some of you have also pointed out, that, as demographics
changed and economies shifted, many communities found
themselves with former industrial and commercial property that
was now lying vacant. But they also found that they couldn't
get investment and redevelopment into those properties because
there was a fear of liability, particularly liability under the
Superfund statute.
That left the mayors with a dilemma: they have vacant
property; they can't get the investment; and, instead, they saw
capital being invested outside of established communities in
former green space, and the result of this was stranded
infrastructure in our established communities, creating the
need for new infrastructure out in former green space. And with
that development we would have also increased environmental
impacts that just naturally arise from people being there, for
instance construction and paving. Development does have an
environmental impact.
By putting all these issues together and focusing on them,
the Conference of Mayors was very effective in putting together
a coalition of redevelopers, open space advocates, community
groups, and they brought this matter to the attention of
Congress, EPA, States, and other policymakers. Now, the primary
focus of their efforts was to remove the barriers to
redevelopment, and that primary barrier was the fear of
Superfund liability. They also successfully made the argument
that there needed to be some Federal seed money to jump start
redevelopment in blighted areas and to increase local capacity
to address brownfields.
States responded to this by establishing State voluntary
cleanup programs such as Pennsylvania's Act 1 Program, or Act
2, which has been very successful. EPA responded by developing
tools such as prospective purchaser agreements, which was
labor-intensive and site-specific, but the Agency would enter
into agreements with new property owners and, under that
agreement, would protect them from Superfund liability.
EPA also entered into memoranda of agreement with States
that had voluntary cleanup programs, and, again, Congresswoman
Schwartz mentioned those. Those would provide comfort to
redevelopers that, if they were complying with the State
requirements, that EPA didn't intend to come in and establish
different requirements or secondguess State decisions. EPA also
began to provide seed money for brownfields redevelopment.
Now, even though we had those administrative tools, most
agreed that legislation was necessary. The administrative tools
were case-by-case and resource intensive. So, again, as this
Subcommittee knows, with strong support from this Committee, by
Congress and by President Bush, Congress did pass the Small
Business Liability Relief and Brownfields Revitalization Act in
January. Well, actually, as the Chairman will remember, it
passed, I believe on December 20th, at 4:00 a.m., nearly 5:00
a.m., at the very end of the first session of the 107th
Congress. And the Senate passed it after that, and then the
President signed it in January of 2002. But after that very
successful effort, the legislation then provided a clear
mandate to EPA to carry out and provide the tools for
brownfields redevelopment.
EPA has taken great strides to implement the law. It
required a lot of new guidelines to be issued in a very short
time period. And now that I am on the administration side of
the program, I recognize how complicated it is to put out
guidelines, and they successfully were able to do that within a
year and have a competition under the new rules that began in
2003.
Under the new law, there were specific criteria for how
grants were to be awarded, and I just want to briefly describe
that. For awarding the cleanup, the assessment, and the
revolving loan fund grants, EPA has a process where the
applications are reviewed by regional panels first, just to
make sure they reach the threshold criteria; then the grants
that meet those threshold eligibility criteria are then
reviewed by national panels and assigned scores; and that is
how the selections are made, they are made by the
recommendations of experts.
Recently, we did complete the competition for 2006. We
received about 700 applications and on May 12th announced
awards of $69.9 million to fund 292 grants to communities in 44
States and 2 territories.
The other funding that is authorized under the brownfields
law and that EPA implements is funding to support the State
voluntary cleanup programs. That is under Section 128 of the
law. Now, these grants are allocated out to the States in a
non-competitive process because the concept is to be able to
have every State have a successful voluntary cleanup program.
What the Agency has been doing is allocating those grants, but
in allocating those grants we have been looking at unspent
funds. This is part of being careful stewards of the funding
that Congress has provided to us. We are making sure that the
States are spending the money that is given to them and, in
fact, are reducing their allocations dollar for dollar, if they
haven't spent prior awards.
The program has had tremendous results. Through EPA's
efforts and EPA funding, there have been more than 8,000
assessments. As the Chairman mentioned, we have leveraged more
than $8.2 billion in cleanup and 37,000 jobs. But I also want
to point out that that is where we have direct Federal
participation. The vast majority of the work is being done
actually in the States under the State programs. We estimate
that 48,000 properties have been cleaned up through those State
response programs, and we know that about 53,000 properties are
currently enrolled in those programs.
In terms of being able to work more closely with the States
and to better understand all the cleanup activity that is
taking place nationwide, we are working with the States to
collect data now on their accomplishments as well.
I now know that I have gone over my time, so I would like
to say that I am happy to be here to discuss the management of
the program. I am very happy to be here to start a dialogue on
how to improve the program, both administratively and in your
reauthorization process. Thank you.
Mr. Duncan. I thought the least likely person to run over
her time would be you.
[Laughter.]
Mr. Duncan. I can tell you that I do remember well speaking
on the floor on that bill at 5:00 a.m. in the morning. That is
the only time I think I have ever spoken on the floor at 5:00
a.m. in the morning, although I did recall, thinking back, that
many years ago I offered an amendment to another bill at 3:00
in the morning, and I think I got the fewest votes on that
amendment of any amendment I have ever offered, and I sort of
made up my mind to never do it at that time of morning again; I
don't know whether that is such a good idea to bring up
something at that time.
Mr. Magill.
Mr. Magill. Good morning, Mr. Chairman and members of the
Subcommittee. I am John Magill, Deputy Director of the Office
of Urban Development in the Ohio Department of Development. On
behalf of Ohio Governor Bob Taft, Lieutenant Governor Bruce
Johnson, Director of the Ohio Department of Development, I
thank you for the opportunity to discuss the important role of
the Brownfields Program in Ohio's brownfield redevelopment
strategy.
Brownfield redevelopment is a critical element of Ohio and
the Nation's economic security. The task of cleaning up
brownfield property requires the collaboration of the Federal
and State governments operating within the free market.
Measurable success is appearing across the Country, giving an
impetus to reauthorization of the Brownfields Program.
Ohio has developed one of the Nation's vibrant brownfield
programs by combining U.S. EPA grants along with Ohio's $200
million Clean Ohio Revitalization Fund. This Federal and State
collaboration demonstrates the value and vitality of the
federalism model. Development has received two brownfield
revolving loan fund and two supplemental grants. With these
grants we have made four loans and are scheduled to close a
fifth in July. The department is uniquely positioned to see the
role of the grants in cleanups, economic development, and
creation of parks.
U.S. EPA funds were loaned to the Columbus and Franklin
County Metropolitan Park District to conduct remediation and
demolition activities on 16 acres of the Whittier Peninsula in
Columbus, a historic industrial site, which will become part of
a new 80 acre urban park. Metro Parks and the Audubon Society
will invest more than $10 million into the development of the
park.
The Brownfields Program is an example of the Federal
Government's role to facilitate commerce as envisioned by the
founders. Commerce cannot occur on a brownfield without
cleanup. The cost of this effort, due to changes in the
economic fabric, must be borne by both private and public
parties.
To remain vibrant, the Brownfields Program should look for
ways to strengthen and grow. The first step would be to foster
the development of sustainable organizations. A second action
would be to place a premium on using dollars to leverage
private capital and act as an equity investor in projects with
community goals.
A way to achieve sustainable organizations is for U.S. EPA
to recognize the difference between assessment and cleanup
grant awardees and RLF awardees. Assessment and cleanup grant
dollars encourage smaller communities and non-profits to
analyze properties to determine their environmental condition
and prepare them for redevelopment. The challenge is the grant
amount limits the type of projects and may not be part of a
long-term strategy.
Underwriting the cost of cleanup and servicing loans
requires sophistication and resources beyond that offered by
U.S. EPA. Regional and State organizations that have a history
of effectively undertaking economic development lending would,
as grant recipients, complete more loans with quantifiable
economic and community results. The Brownfields Program needs
to examine ways to attract private capital to cleanups. A step
on this path is promoting a variety of flexible RLF financial
products, ranging from loan guarantees, loan deferrals, and
balloon payments.
The Brownfields Program, if reauthorized and fully funded,
will catalyze innovative and dynamic redevelopment in Ohio and
across the States.
Thank you.
Mr. Duncan. Well, thank you very much, Mr. Magill. Very
fine testimony. You know, I will mention one thing, though,
that almost nobody ever thinks about. It always sounds great
for a politician to create a park, but we have created so many
parks now, Federal, State, and local, that we can't even take
care of all of them. But the main concern is that we keep
taking land off of the tax rolls and shrinking our tax base, at
the very time that the schools and all the other government
agencies and departments are demanding more and more money. And
we have got to really think about that before we just blindly
say that creating another park is a wonderful thing.
Ms. Manning.
Ms. Manning. Good morning Mr. Chairman and members of the
Subcommittee. My name is Terry Manning and, as mentioned, I am
a Senior Planner and the Brownfields Coordinator for the South
Florida Regional Planning Council. I am honored to be here
today to discuss the Brownfields Program with you and how we
have been able to utilize the EPA programs and offer some
suggestions for the future.
Brownfields redevelopment is a voluntary redevelopment tool
that is being used by many local governments in the Southeast
Florida area to help in the redevelopment of actual or
perceived environmentally contaminated properties. In the
Southeast Florida Counties of Miami-Dade, Broward, and Palm
Beach, the Eastward Ho! Brownfields Partnership was created in
1997 as a forum to bring together local governments along with
non-profit and other governmental agencies to address
brownfields issues. This is an area that includes approximately
40 percent of the population of Florida and is growing.
We are part of the larger Eastward Ho! effort which seeks
to revitalize and improve the quality of life in Southeast
Florida, and we are sometimes referred to as a portion of the
urban component of the Everglades restoration. We are trying to
lessen development pressure and urban sprawl in the sensitive
lands in the western part of our region that are needed to
restore the Everglades and to ensure our future regional water
supplies.
Over the years, the Brownfields Partnership has found the
following obstacles to brownfields redevelopment: the lack of
adequate funding for cleanup; concerns over environmental
liability; the need for environmental assessment of properties;
the uncertainty over cleanup standards; inadequate or non-
existent infrastructure systems necessary to support
redevelopment; unfavorable neighborhood and market conditions;
land assembly problems; the reluctance of the private sector to
invest in distressed communities; and the time and effort
needed to address environmental and other issues.
To address these concerns and to assist in brownfields
redevelopment issues, funding from EPA Brownfields Program has
been utilized to try and address these problems. Funding under
this program has been used to assess and clean up brownfields
and to assist in redevelopment efforts.
The following is a brief summary of the programs that we
have been able to use within the Southeast Florida area, and
again, I am referring to the three county area: we have been
able to receive assessment project for one county, four cities,
two regional planning councils, one community redevelopment
area, and one tribe; we have received a revolving loan fund
grant which has been utilized so far to loan out money to two
for-profit businesses.
And on Monday morning I was approached by a non-profit
entity that it looks like we might be able to do a third loan
with; we have received cleanup grants for two cities and one
community redevelopment agency; we have had two job training
grants; and we have received targeted brownfield assessment
funding for numerous cities, and this funding is through the
Florida Department of Environmental Protection but is actually
EPA funding.
Because of this funding, we have noted the following
positive outcomes. And I am going to mention some numbers here,
and these are for completed projects. We have more projects in
the works. We have been able to leverage this money with $1.3
million from the State of Florida, $10.4 million from local and
regional governments, $31 million in private funding. And
because of this we have been able to complete environmental
assessments for approximately 390 sites.
Fortunately, 75 of these sites we have found to be clean
and do not need further remediation. Twenty sites have actually
undergone remediation activities and are either undergoing
redevelopment or will shortly undergo redevelopment. This has
resulted in approximately 2,000 jobs and 600 housing units for
very low-to moderate-income people. A total of 88 students have
been trained under this program, with 95 percent of the
students receiving employment in environmental fields. We have
been able to combine the Federal and our State program and
designated nearly 50,000 acres of land under the Florida
Brownfields Program.
I should also mention that without the Florida Brownfields
Program, we would not be able to complete many of these
activities, and the Florida Brownfields Program does have a
Memorandum of Agreement with EPA in order to promote
brownfields activities, and we think it has been very
successful.
But much remains to be done. Suggestions for the future
include the following: providing more flexibility in the way
EPA grants are funded, including combined grants for assessment
and cleanup; using a rolling grant application process instead
of a once a year process--this will allow for more timely
access to funding--increase overall funding. We also would
suggest streamlining reporting and other requirements.
We also recommend looking at the brownfields loan program,
the revolving loan fund programs to increase the amounts for
capitalization of grants and to allow the funds to be used to
help guarantee more private loans, which we feel may increase
the number of loans that are made. Also, we recommend that more
thought be given to the duplication of programs under State and
Federal programs.
Thank you, sir, for your time.
Mr. Duncan. Well, thank you very much, Ms. Manning.
Mr. Philips.
Mr. Philips. Thank you, Mr. Chairman, members of the
Committee. My name is Jonathan Philips, and I am Senior
Director of Cherokee Investment Partners based on Raleigh,
North Carolina. Thank you for the opportunity to testify in
support of reauthorizing the Small Business Liability Relief
and Brownfields Revitalization Act.
Cherokee is the largest and most active private investment
firm in the world specializing in the acquisition, cleanup, and
sustainable revitalization of brownfields. Since inception, we
have acquired over 520 sites across North America and Europe.
We are privileged to be fiduciaries of institutional capital
providers to perform this important activity. We are not aware
of any private organization in the world that voluntarily
cleans up more pollution.
The Brownfields Act that we are here today to support has
been an important first step in returning neighborhoods to
healthy places where families can live and work. Brownfield
revitalization catalyzes positive community transformation that
extends well beyond the individually contaminated sites. This
community transformation and resulting ripple effect throughout
neighboring communities writes new chapters of hope from the
often sad histories of economic and environmental decline and
urban blight.
This Act includes important tools for local communities to
assess contamination and start planning for redevelopment, and
it includes important provisions regarding bona fide
prospective purchasers. The dedicated team of staff at the U.S.
EPA should be commended for their implementation of these
critical programs.
A larger brownfield coalition, of which Cherokee is a
member, has provided written testimony today detailing a number
of specific issues that should be examined by this Subcommittee
as it considers reauthorization. There are many good
suggestions in that statement. We would encourage members to
specifically explore modifications that could be made to the
existing definition of brownfield under the Act to bring in
sites that are currently excluded under the Section 101(39)(b).
One example would be to enhance communities' ability to
prioritize sites for use, eliminate currently defined set-
asides for certain types of sites--petroleum brownfields and
sites acquired prior to the January 2002 enactment--and allow
all brownfield sites, as defined broadly by 101(39)(a), to
compete for program resources and those legislative enactments
that definitionally key off of Section 101(39).
Another example is sustainability, as mentioned by
Representative Schwartz just a few moments ago. When we clean
up pollution below ground, what are we doing to protect our
environment above ground when we redevelop? Many of you know
buildings consume roughly 50 percent of the energy in our
Country. Let us create a positive mirror image and offer
incentives, legislative incentives for sustainable development
and green building on these sites so we can replicate on top of
the sites the same environmental benefits produced by cleaning
up what was below the ground. And this is something that we
already practice and we look to further pursue.
Mr. Chairman, in our mind, there is no question that this
Act should be reauthorized. From Cherokee's perspective, we
need to go further. If Congress wishes to seriously address
this Nation's brownfield crisis, we must develop additional
Federal incentives to draw private investment dollars to the
more complex and economically less desirable sites. These are
sites that are more complex, take longer to redevelop, involve
significant liability and cost overruns, risks, and almost
invariably lead to the various permutations on the same
question that we hear so frequently from others in the
traditional development world, which is: Why should we invest
in this site given its risks, limitations, unknowns, additional
costs, and brain damage required, when I can just develop the
next farm on the proverbial ``edge of town''? Why should we
engage in this redevelopment?
Well, Congress has responded, not just with the Brownfields
Act, but with important programs such as the 198 expensing
provisions, recently created unrelated business income tax
exemptions, and Representative Turner's proposal to create
transferrable tax credits. Each of these holds tremendous
promise for returning brownfield sites to productive use.
The incentives the Federal Government provides can take
many forms: direct funding, tax credits, loan guarantees to
reduce the cost of debt-financed redevelopment, or other tools.
Local and State governments can assist with expedited
permitting and other tools to encourage brownfield
redevelopment. What is important is that these incentives need
to directly address the financial underpinnings of brownfield
transactions.
In testimony before other subcommittees, I have encouraged
members to think about brownfields as ``under water'' or
``above water.'' A site that is ``under water'' is a site that
the marketplace will not redevelop on its own given the cost of
cleanup, the value of the property in a clean state, and
various other factors. A site that is ``above water'' is likely
to be cleaned up and revitalized by the private sector without
government assistance.
And along this continuum, there are some sites that are
barely below water. These are sites that may be redeveloped
during a favorable economic upturn or with a slight nudge from
a Federal, State, or local incentive program.
Unfortunately, most of the sites we think of as brownfields
are further underwater, many considerably so. Without
significant public assistance, these sites will never be
remediated by the private sector.
It is critical to note that these terms, ``under water''
and ``above water'', take into account only what I will call,
for lack of a better term, ``internal'' costs and benefits of a
developer. They do not reflect the various public benefits that
development would bring, such as reduced pollution, more jobs,
reduced sprawl, or increases in tax revenues.
So one mission of government, then, must be to focus
particularly on those properties that are under water from a
market perspective and above water from a public perspective.
For those sites, we need an aggressive mix of local, State, and
Federal programs to encourage the private markets to undertake
the task of remediating pollution and redeveloping sites. We
encourage Congress to take specific notice of the significant
challenges faced by public and private actors seeking to
perform land assembly for large brownfield revitalization,
where master planning is the most effective way to move
brownfield and underutilized lands from blight to robust
productivity. Without effective tools to control brownfields or
blighted zones, these sites will indefinitely sit.
Having said that, we appreciate that it is extremely
difficult to discuss brownfield incentives in the abstract.
Without looking at actual sites and running numbers on actual
projects, it is almost impossible to assess how well an
incentive program will function.
I see that my time is up. I just wanted to extend a genuine
offer to the members of this Committee. My company is extending
a serious offer to help you assess the reforms required for
this reauthorization. If you have a site in your district that
is a priority site, and even if that site does not meet our
investment criteria, we will sit down and work with you and
your staff to walk through our underwriting of those projects
and help you assess in real concrete terms, real-world
examples, what impediments exist and what challenges exist, and
what incentives might be needed in this legislation.
Thank you very much for your time.
Mr. Duncan. Well, thank you very much, Mr. Philips. I think
that might be very helpful.
Dr. Meyer.
Mr. Meyer. Thank you very much. Mr. Chairman, members of
the Committee, I thank you for the invitation to join you
today. My name is Peter Meyer. My comments today are informed
by 14 years worth of research on brownfields--by the way, that
is longer than the program has been in existence--conducted
mostly with my research partner, Dr. Kristen Yount, who is a
Professor of Sociology at Northern Kentucky University, where I
am now. In addition to my NKU post, I direct something called
the Center for Environmental Policy and Management at the
University of Louisville, and I also serve as the Director of
an EPA-funded environmental finance center there.
For brevity today, and largely because much of this has
been already covered by others, I am going to skip all comment
on the successes of the program. What I want to turn to is some
cost-effectiveness and performance measure issues that I think
are important, and then look at some challenges and some of my
take on them.
I am an economist by training, and I am backing away from
offering you any dollar figures having to do with the successes
of the program. And the reason that I do that is that I don't
trust the direct impact data for a variety of reasons. These
are not specific to brownfields; they come from a general
problem associated with economic development programs and
evaluating them more generally; and I used to do work in that
arena.
The counterfactual is something that we don't know, it's
not knowable. When we see the offer of a subsidy followed by a
new investment, we have no way to empirically demonstrate what
would have occurred without the incentive offer. And this has
to do with the above water-below water that Mr. Philips just
referenced. The value of any one incentive may be impossible to
extract because, and, again, if you look at what Ms. Manning
just put before you, you have multiple incentives feeding into
any one project. So isolating the value of any one of them is
exceedingly difficult.
But, yet, making it even more complicated is the fact that
the direct economic impacts of site redevelopment are in fact
not limited to the increase in the value or the new users or
the new jobs or the new tax revenues just on that one parcel of
land; it spills over to other land in the entire area. And this
makes it very, very difficult to ascribe direct economic
benefits to any one stream of dollars.
There are, however, other measures of the economic value of
the Brownfields Program, and one that I want to put before you
is something that is the accelerated rate of entry into the
brownfields business of new firms. Some of the brownfield
specialists that I was interviewing in the 1990's--including
the gentleman to my right--have complained to me about the fact
that there are too many developers. From their point of view,
there is too much competition for those brownfield sites that
they used to be able to get for a song. I submit to you that
the brownfields bill played a significant role in changing the
entire climate of brownfield reinvestment and risk perception
on the part of those developers.
Based on my past research, I can conservatively claim that
the effects of the Brownfields Program on redevelopers'
perceived risks have probably saved State and local
governments, at a bare minimum, $100 million in the subsidies
that they otherwise would have had to offer developers to get
them to do the brownfield redevelopment that we have
experienced. And this is a benefit on top of the benefits that
we get from the redevelopments themselves.
I should add, by the way, as we look at performance
measures, that increasingly we have got brownfields being
redeveloped that never enter the State programs, never apply
for Federal money, but are being redeveloped because of that
climate change that has been generated by this bill.
And, finally, I should point out, with regard to those
kinds of measures, that infrastructure utilization has
improved. We are now more fully utilizing infrastructure that
exists in our urban areas instead of then having to build new
infrastructure in the rural areas. These are all valuable
performance outcomes.
But a variety of challenges remain. I should put on the
table mothball sites, which are idle sites, tie up capital.
They are basically a drain on the U.S. economy. Sites are
mothballed because the firms that own them fear that they will
be the deep pockets that will be tapped under the strict joint
and several liability provisions of CERCLA if any problems or
costs arise, no matter how far in the future.
The new FASB rules may help drive some of these mothballed
sites into the market. The liability shadow will remain. I
would suggest that one of the things the Federal Government may
want to look into is becoming a re-insurer of last resort for
the environmental insurance industry. This is something that
could produce significantly greater access to and more readily
available long-term risk transfer capacity on the part of the
environmental insurance industry that should get firms to
release their sites to the market.
On the other hand, we have a very big problem with our
small sites. The vast majority of the up to a million
brownfield sites in the United States are in fact going to be
under a half an acre in size. Half an acre is not very big.
Most of the brownfield redevelopment specialists generally look
for at least 10 acres. What is the potential return to a
municipality or other local government from taking steps to
facilitate the remediation of a brownfield with Federal help, a
brownfield that has depressed the economic activity and
attractiveness of all the sites nearby, not just that one site?
What we are dealing with here is we are dealing with
spillovers and spillover returns that are not well enough
recognized.
By the way, Mr. Chairman, you can get those kind of
spillovers from, in fact, putting a park where there was none.
And you can get offsite benefits in terms of tax benefits. This
is something we have all understood for decades in taxing
permit financing.
Minor changes in grant applications merit scoring could
help the municipalities to think more about looking at those
area impacts, and that is doubly important in the context of
depressed neighborhoods, which are shot through with
brownfields, where each one affects the other one and makes it
that much more difficult to attract capital to any one of them.
In that situation, local governments could play a role in
taking title to those properties, but the new GASB standards
are likely to make it more difficult for them to do so.
And some Federal help in the form of liability relief from
Federal liability for small municipalities that take title to
sites in order to redevelop them, following the logic of the
lender liability relief that was provided in the 1997 Budget
Reconciliation Act, I think could be something that could be
very, very valuable in terms of signaling to the States that
they need to help their municipalities with liability relief.
I thank you very much for your attention and look forward
to your questions. And, by the way, I can empirically defend
the statements I made. Thank you.
Mr. Duncan. Thank you very much. Very interesting
testimony, Dr. Meyer.
Dr. Boustany.
Mr. Boustany. Thank you, Mr. Chairman. This was indeed very
interesting testimony.
I mentioned earlier performance measures, and we know that
EPA does report on cumulative sites addressed, jobs generated,
cleanup, development activities, funds leveraged, and so forth.
But what about actual cleanup and redevelopment activities,
which should be one of the primary goals of the program, and
also, looking even further down the line, mitigation of future
risk? It seems to me that performance measures are linked,
critically linked to this issue of liability and liability
relief. I mean, certainly in my State of Louisiana, we have had
our share of lawsuits dealing with underground water aquifers
and things like that.
And I was impressed, Mr. Philips, with your testimony. You
got a little bit into some of the things you have to do as a
private investor to shield yourself, so let me start off by
asking you how do you minimize your liability as you go forward
in these investments?
Mr. Philips. Sir, the very best way to minimize liability
when you are seeking to invest and redevelop a brownfield and
do it sustainably is to attack the pollution quickly, literally
spending dollars up front, first dollars, and the riskiest
dollars, by the way, when you consider it from a real estate
perspective. That is the single best way to mitigate one's
liability. If you walk into a site with your eyes open and you
know that part of this project involves cleaning up pollution,
and you are going to assess very carefully, in advance, what
the costs are associated with that, the liability associated
with that site drastically reduces when you start spending
those dollars.
We also use other risk management techniques. Environmental
insurance, which has been mentioned by a number of people, is
important to our transactions, and there are two types: sort of
a pollution liability, legal liability, and there is also a
cost overrun product that is out in the market.
So I would say those two would be the first ones.
Mr. Boustany. Out of the 520 sites that you have acquired,
are some of them small sites, or are you mostly focusing on
large sites?
Mr. Philips. As we have gotten larger and we have continued
with your track record, our investors have entrusted in us more
capital to deploy, and that has meant that we have been able to
invest in larger sites. But that doesn't mean that there are
individual parcels that are larger; it could be that we are
assembling large amounts. One the gentleman mentioned, the
project in Charleston. That is one of our projects where we
have assembled a number of sites along the industrial neck area
of the river, some large, some small.
But we view brownfields as a zone, as a redevelopment zone.
And sometimes you have to buy property outside of the
individual sites in order to make the economics work, because
when you transform one site, it will have that ripple effect in
the surrounding area. And if you can capture those economics
from the surrounding area, then you can place a bet that at the
end of the day you are going to be return investors' capital,
and a return on that capital as well. So that is how we think
about things.
Mr. Boustany. Dr. Meyer, you mentioned the small sites and
mothballed sites, and some of the problems associated with
those. Do you think we need to catalog these, have some sort of
official cataloging and come up with a separate way of dealing
with this to mitigating the economic blight that is left
behind?
Mr. Meyer. Well, let me start with the mothballed sites.
Under the new rules, FIN 47, which implement the financial
accounting standard boards--what is it?--143 ruling basically
requiring disclosure of environmental liabilities as part of
the asset disposal for requirements for firms in the United
States in terms of financial accounting, that is going to
require the firms, certainly those publicly traded, publicly
traded firms, to disclose those liabilities. That is going to
give us a partial inventory, if you will, of the mothballed
sites. They are also much smaller in number than the small
sites. So that is the easy part of the equation, if you will.
With regard to the small sites, look, we are talking about
hundreds of thousands of sites. We are talking about, you know,
the dry cleaner here, what was a gas station some time before
someplace else, we are talking about old machine shops, we are
talking about paint shops. The retail sector is really
responsible for the largest number of the brownfields in
absolute numbers, not in acreage, obviously.
There are a number of problems here. If in fact you go out
and you label a site as a brownfield, what do you do to the
property value of the adjacent site? Do you really want to have
that inventory out there? I mean, this is a very, very serious
problem in terms of the stigma that gets spread around the
area.
By the way, the other side, the flip side of that is
eliminating that stigma is something that happens when you
clean up that site, so that, in fact, if all you look at is the
numbers, the return on that one property--same point that Mr.
Philips just made--you have got to look at the impact on the
adjacent properties. That is not being done by municipalities
right now for the really, really small sites, and I think there
is an under-investment as a result.
But I don't think there is a cost-effective way of doing
the kind of an inventory you are suggesting for the very, very
small sites.
Mr. Boustany. I was just interested in your view on whether
it should be done. But what do we do to stimulate cleanup of
the small sites? Do you have any ideas on that?
Mr. Meyer. Well, the argument that I try to put forward in
my written testimony in somewhat more detail is if in fact
there are a couple of things that happen. First of all, we have
got a grant application program right now, and the funny part
about this is that there is an advantage in what I am about to
say in the fact that it is not fully funded and we can't
provide funding for everybody who applies. There is some
discretion with regard to the waiting that is provided for
different provisions and different elements of the
applications.
One thing that could be done is for, in fact, the Office of
Brownfield Cleanup and Redevelopment in the grant application
process to modify some of the language in there to provide
greater weight and greater, if you will, points for those
applications that come from municipalities that recognize those
spillovers and focus on some of those smaller sites. If that is
a sufficiently high priority, that is something that can be
done. That sends a message to all of the other would-be
applicants, potential applicants that puts the agenda out on
the table more, because there is a certain amount of educating
the needs to be done to get this to be done.
We could be doing more in the way of, you know, technical
assistance and that kind of thing to local governments in that
regard. But they are very, very difficult to do, and the other
problem you run into is at the State level, in many instances--
well, sir, you are from New Jersey, if I remember correctly.
In the State of New Jersey, if in fact an abandoned gas
station, for example, becomes tax delinquent and it moves into
the ownership of a municipality, that municipality is not
liable for that cleanup, legally, within the State of New
Jersey. But if in fact that municipality buys that small site
to do the kind of area-wide redevelopment, the site assembly
kind of logic Mr. Philips just talked about, then the
municipality becomes liable.
Perhaps if the Federal Government waived that liability for
those municipalities, that might send the message to the States
maybe you guys ought to be doing that too. And that is another
way of encouraging the municipal action, because what is
absolutely critical, as you pointed out earlier, Mr. Chairman,
in your opening remarks, is that partnership between the
Federal Government and local governments with regard to
brownfields.
Mr. Duncan. All right. Well, you are giving very good
answers, Dr. Meyer, but we are going to have a vote here in
just a few minutes, and I want to go to Mr. Pascrell and give
him a chance.
Mr. Pascrell. Well, Mr. Chairman, they were excellent
questions and great responses for the Committee.
Ms. Bodine, you mentioned in your testimony, you talk about
the landlord liability protections. Yet, we know that a final
rule is being issued in 2006, it goes into effect, I think, in
November, dealing with liability protections.
Could you tell us what the present system is and what we
will move to in November of 2006 with regard to the general
question of liability? Because that is a major issue in all the
development in all of these properties, and many municipalities
need some technical assistance to deal with that, as I see it.
Would you agree, the rest of the panel?
Ms. Bodine. Congressman, I am going to have to answer that
question for the record. I am embarrassed to say that I need to
check and--I don't want to mislead you. I want to make sure
that my answer is accurate. So I will provide that for the
record.
Mr. Pascrell. Would you do that, please?
Ms. Bodine. Yes, I will.
Mr. Pascrell. And would you also provide for the record the
States that are not spending what they were allotted?
Ms. Bodine. Yes, we have that.
Mr. Pascrell. There is such an animal, right?
Ms. Bodine. Yes, that is accurate.
Mr. Pascrell. And you will present that to the Committee?
I would like to ask, Mr. Magill, what about the question I
presented before about allowing communities to apply for
assessment and cleanup grants with one application? What about
that idea, does that make sense to you? And anybody else can
jump in. Make your answers as brief as possible, please.
Mr. Magill. Thank you, Representative Pascrell, Mr.
Chairman. I believe that the combining of assessment and
cleanup awards is a viable idea. The challenge is it requires a
trigger mechanism, because some of the sites will turn out to
not be as dirty as has been anticipated, and may be able to
move to redevelopment in a more timely fashion without the
expenditure of any cleanup or lower levels of cleanup than had
been anticipated. So the application process and rules would
have to allow for what we call in Ohio sometimes a stop-start.
We stop, we evaluate the phase 2 data, and then you would move
on to do the cleanup.
Mr. Pascrell. Thank you.
What about the other members of the panel? Yes, Ms.
Manning.
Ms. Manning. I think the combining of a cleanup and
assessment grant would be a great idea in many cases. I can
give you specific examples of projects where a city has had to
apply for an assessment grant one year and then has had to wait
one or two years to go for a cleanup grant; whereas, if they
had been able to go from assessment to cleanup, it would have
had redevelopment on the ground probably in a year.
Mr. Pascrell. I had to handle that kind of frustration, and
what happens, if the wait is so long, it debilitates the
project, many times, and people walk away.
Ms. Manning. Right. And also sometimes there is no
guarantee that if you get an assessment grant, you will get a
cleanup grant, and that could kill a project.
Mr. Pascrell. How about the other members of the panel?
Mr. Meyer. I think that the one comment that should be made
I think is that there are two things that can get done with
this with assessment grants: one way is doing individual sites,
another way is trying to do a much more blanket job, for
example, on very, very small sites. Let us go out and assess as
many tiny sites as we possibly can with the money in hopes that
we find that all of them are clear, or that 80 percent of them
don't require any additional work.
So we are really looking at those assessment grants to play
two different roles: one is the first step on properties that
are already targets, and the other one is that very, very broad
base scattered site thing. And the issue then is we would like
the assessment grants to be able to serve both purposes.
Mr. Pascrell. So there is something we can do in the
process situation to make this a lot easier.
My final question is this, Mr. Magill. Should Congress
consider making it easier for communities to apply for cleanup
grants for properties that they don't yet own? This is a major
problem in New Jersey, and I am sure it is a major problem in
other areas. What do you think about that idea? What is the
pluses, what is the minuses.
Mr. Magill. Congressman, Mr. Chairman, I think there are
some pluses. The challenge--and this is what we do in Ohio in
our Clean Ohio Revitalization Fund--is that you have to have
adequate assessment information submitted at the time of
application. So the seller or the party who currently owns the
property must be willing to provide to the applicant--that EPA
will evaluate--a time on the site to conduct adequate
environmental due diligence, phase 1 and in the invasive phase
2, soil samples and groundwater samples. So I think the answer
is yes, and it requires trigger mechanisms to ensure its
success.
Mr. Pascrell. Anyone else? Mr. Philips?
Mr. Philips. I would agree that consent and collaboration
and cooperation of the seller is really vitally important on
that issue. And I think you could easily run into a situation
where you have the same problem with mothballed sites, which is
that because of the concern for bringing daylight to a
particular problem of liability, that the risk outweighs the
reward, and, therefore, you might have fewer applicants. But I
think if you have the cooperation of the seller, I think it is
a wonderful idea.
Mr. Pascrell. Many of these communities are reluctant to do
this before they own the property, because they say once we own
the property and the questions of liability occur, what happens
if we find that the situation is far worse than we ever thought
it to be? Then what? So I am saying to you there are still more
pluses than minuses in the communities being allowed to apply
for this money even before they own it. Is that what I am
hearing?
Mr. Philips. I think it is an important option to have.
Mr. Pascrell. Ms. Bodine, what do you think?
Ms. Bodine. Well, you are talking about a statutory
authority change. We don't have the authority now. But I would
also point out that the issue that you are raising comes up in
two contexts. You are addressing it in the context of wanting
to do the work before the entity is going to acquire the
property.
It also comes up in the context of entities that don't want
to acquire the property at all but they are, in effect, good
Samaritans and want to do work on the property without entering
the ownership chain. So the ownership requirement has raised
issues in the program.
Mr. Pascrell. Thank you.
Thank you, Mr. Chairman.
Mr. Duncan. Thank you, Mr. Pascrell.
Ms. Schwartz.
Ms. Schwartz. Thank you. I just wanted to follow up. I know
some of my comments in the opening were addressed during your
testimony, but I was wondering if you could be more specific.
And I think, Mr. Philips, you specifically addressed the issue
I raised about green buildings. Maybe others might want to
briefly just answer some of these questions.
What more can we do or should we be doing in moving forward
in being able to be an advocate--but I want to be stronger than
that--about green buildings? We are using public dollars here
to clean up brownfields; we are going to put new entities
there. We are all involved in those stages. There was this
pilot project.
Really, my question is what more should we be doing? Should
we give priorities to a project that is going to build green
buildings? Do they get priorities now in any of the programs
that you are involved in? Should we set more requirements for
the kind of buildings that get built on brownfields? Do you
feel like that would be too many strings attached?
Basically, my question is, what more could we be doing
through the reauthorization particularly for EPA or on the
local level for us to be able to be setting standards for the
kind of development that goes into brownfields?
Let us step it up a notch. We know there is much more that
we want to do just for the brownfields if we were to redo it
just the same way. But now that we know so much more, there is
so much more technology available, so many more tools, as we
say, in our toolbox to create these sort of more energy
efficient buildings, should we not use them in this process?
Mr. Philips. I think that is a very astute question. If I
could just begin by saying that we have noticed that there is a
strong analogy between the economics of brownfields and the
economics of green building, in that both involve complexities,
both potentially involve greater costs, and both are in the
public good; to clean up brownfields, to engage in more green
building.
We at Cherokee have launched our green initiative, where we
were, frankly, ashamed of ourselves, because we were cleaning
up a lot of brownfields and we hadn't been paying as much
attention to the build-out on these sites, which results in
billions and billions of dollars, sometimes on a per project
basis.
So what can we do about that? Well, as landowners, we can
begin to mandate that certain green building standards and
sustainable design features are implemented. We have a national
home builder management green home that we are doing with the
National Association of Homebuilders as a showcase for that
exact reason.
But we do recognize that just as municipalities today are
giving more and more incentives, accelerated permitting for
green buildings--and also for brownfields in certain cities--we
could imagine a situation where greater economic incentives,
perhaps, were available if, in addition to performing the
cleanup under the ground, you could ensure that a certain
standard of green building or sustainable design occurred on
top of that site. That would be, from our perspective, a
wonderful idea.
Ms. Schwartz. You raised a really good suggestion, which is
if you just accelerated the process, I think that saves dollars
along the way. If you know that you are going to get your
approval process done three months sooner, then you just saved
the developer potentially quite a bit of money that then could
be used in ways that would really be more sustainable and more
energy efficient.
I guess I would throw it back to the EPA and whether you
would be open to adding some of that kind of language to create
the incentives, financially or just logistically, as kind of
suggested, as a financial fallout. Would you be open to doing
something like that?
Ms. Bodine. First, I want to say that EPA supports green
buildings. In fact, EPA has just moved into some new GSA space
at Potomac Yards over in Crystal City, which is a brownfield.
The building is a green building; it has natural lighting, it
has low flow toilets, it is energy efficient in its use, and it
has a rain garden on the roof. So it is one of these green
buildings.
In terms of a preference, well, I guess you have raised two
issues, one is preference and funding for green buildings, and
one is EPA setting standards. On the first, I would respond by
noting that the ranking criteria that Congress put into place
for allocating funding under brownfields are broad criteria,
one of which, of course, is environmental benefits. And the
fact that your redevelopment project is a green building then
allows it to rank higher on that criteria.
So I would suggest to you that the ranking criteria already
work and capture that benefit. And then avoid the problem that
I would have with creating a set-aside for a specific type of
environmental benefit. I think that when you are dealing with
nationwide problems and trying to address them, you don't want
to say, OK, we will spend so much money on this benefit and so
much money on that benefit.
Ms. Schwartz. Yes. I hadn't suggested a set-aside, it was
really more about whether, maybe you want to look at this as to
whether the criteria is strong enough, whether there might be
some additional incentives or a bit more proactive in
acknowledging the future benefits of this, so that it may even
be that a project that is on its way might think about doing
this. It was just suggested by Mr. Philips that he had to sort
of step back himself, as a developer, and say we didn't
initially think of that.
Maybe if someone, during this process, has said, you know,
we really love your project. If, by the way, you also would
look at some of these other aspects, that would enhance the
project. I don't know if there is that opportunity for that
kind of dialogue to go on, but, again, sometimes an incentive,
extra few points on a scale can create that kind of incentive.
It is not to tie any hands or to be too specific as far as
location, but it is more to create the incentives, create the
information to be able to make it financially feasible to do
some of these things up front that later on we say why didn't
we think of that, why didn't we do it when we were building
this building.
Ms. Bodine. Right. I think we can certainly make people
aware that those environmental benefits count, and should count
in the ranking criteria.
Ms. Schwartz. OK, thank you. And I think my time is up.
Thank you, Mr. Chairman.
Mr. Duncan. Thank you very much, Ms. Schwartz.
Ms. Johnson.
Ms. Johnson. Thank you very much, Mr. Chairman.
Ms. Bodine, when Congress passed the brownfields law, it
determined that the ratio of assessment and cleanup dollars
program should be 4 to 1 in favor of assessment and cleanup,
and I think I heard in your testimony where you indicate the
ratio is down to 1.4 to 1. Is that correct?
Ms. Bodine. Are you talking about the funding and----
Ms. Johnson. Cleanup versus administrative costs. The
grants.
Ms. Bodine. The grants vary from year to year in terms of
the targets and how many assessment targets there are versus
how many cleanup targets. So your statistics I assume are based
on a particular year?
Ms. Johnson. Well, the grants for assessment and cleanup
are funded at 35 percent of the authorized level, but the
grants to State programs are funded 99 percent of the
authorized level.
Ms. Bodine. I misunderstood your statement. OK. Those
authorizations are separate authorizations. The law doesn't
actually establish a ratio, a funding out of a single
authorization, but establishes two separate authorization
ceilings for the 128 authority and then the 104(k) authority.
Ms. Johnson. Do you know why one is fully funded and the
other one isn't?
Ms. Bodine. There is a recognition that a great deal of
cleanup activity is going on in the State programs that are
funded under the Section 128 program, so when we fund the State
cleanup programs, we are not funding just individual projects,
we are funding a program that then generates many cleanups.
So we want to do both, but when you look at the whole
concept of leveraging, by funding capacity, you are then
creating an institution that is sustainable and continues
cleanups on an ongoing way. By funding a project, you are
creating a cleanup in a single community, but then when the
project is done or when the money is used, that doesn't sustain
and roll over into another project, except where we have the
revolving loan fund.
Ms. Johnson. Do you have any figures on that in terms of
the investment versus the return?
Ms. Bodine. What I have are the estimates that I provided
in the testimony. But we are currently in the process of
changing the agreements that we have with States, the funding
agreements so that they will be required to report back to us
exactly the data on what their progress has been and what they
are achieving with the funding so that we will then have hard
data on that.
Ms. Johnson. Do you know about when you might have that? I
am just curious.
Ms. Bodine. Well, the change in the form is pending
approval. I mean, we have done all the work. I don't have an
estimate right now, but I can certainly get back to you with
one.
Ms. Johnson. Thank you very much.
Mr. Duncan. All right, thank you, Ms. Johnson.
Ms. Bodine, you can see there has been a lot of interest
among members today and a lot of support for the work that is
being done through this program. Based on your discussions with
officials at EPA since you have been there and your discussions
with the staff of the Appropriations Committees and others, and
officials within OMB and the Administration, do you see similar
support? Is the EPA happy with this program and do you think
that they are going to push for greater funding for this
program in the future? And do you see that same willingness to
recommend more in this area by the Administration and by the
Appropriations Committees?
Ms. Bodine. First, yes, I do hear strong support for the
program within the Agency, within the Administration, as well
as in Congress. Notwithstanding that strong support, the
appropriations history for the program has been steady and it
has been at about $160 million a year. And after asking for
higher funding over a series of years and being told no, in the
2007 budget request EPA decided to take no for an answer and
request the funding that has been provided. So that doesn't
mean any less support for the program, but a recognition of
Congress' willingness to fund at a particular level, as well as
what Congress has established as priorities across the board.
Mr. Duncan. Well, I guess one thing I might suggest or
might encourage is that perhaps some of the people involved in
the appropriations process should be perhaps told a little more
forcefully about the enthusiasm at EPA for this program, if it
is there, and perhaps, more importantly, given specific
examples, understandable examples of what has been done and the
progress that has been made through this program.
One thing that Ms. Johnson may have been getting at about
the administrative costs, I am told the EPA currently is using
about $25 million of its own administrative expense budget to
help administer this program or oversee these grants. Does this
compare or how does this compare to the other administrative
costs in the department? Are we spending too much to administer
these grants, do you think, or what is the situation in that
regard?
Ms. Bodine. I think the situation is evolving. What we
have, remember, when the program started it was not an
authorized program and a smaller program with smaller dollars.
What we have now is a statute with a specific mandate and also
specific criteria, which means that we follow those criteria
and have to use FTE to make sure that we are complying with the
law.
So we have EPA employees who are doing the evaluation of
the grant proposals, ranking them so that we are responding to
Congressional intent, in terms of putting projects forward, and
then also managing those grants once they are given out to
ensure that the money is spent. That has been discussed this
morning. We do have to make sure that funds are not misspent.
And also to do grant closeouts so that, after the project is
completed, we make sure that the money was spent for its
intended purposes.
There is a tension between the good management and good
stewardship of Congress' money and yet that creates oversight
costs. And in looking at that, I recognize the tension.
Mr. Duncan. Mr. Philips mentioned a few minutes ago this
coalition of organizations involved with brownfields, and they
have suggested some ways to simplify the funding and grant
process, including the rolling of grant applications,
eliminating EPA approval of brownfield loans, streamlining
reporting requirements, and so forth. What do you think about
some of those suggestions?
Ms. Bodine. I am going to respond, but I also would welcome
a continuing dialogue on these issues, because I am not going
to say yes/no. I just want to point out the issues. On the
rolling of applications, as I mentioned, there are statutory
criteria and a process for ranking grants, which we do on an
annual basis. If we had to do that on a rolling basis, I don't
know how we would be able to rank projects against each other
to appropriately divide up the funding.
On the reporting requirements, we are trending the other
way because of the desire to get a better understanding of the
environmental outcomes, and we are asking grant recipients to
report not just on the number of properties cleaned up and the
number of properties assessed, but we are proposing to change
our forms to have them report, in addition, on the contaminants
addressed, the acres addressed, the media affected, more of the
environmental details, again, so that we have a better idea of
what is going on and what we are achieving, what the outcomes
are for the funding.
So we recognize that that creates a burden. So, again, we
have to balance increased information for good use of resources
against increased burden.
And you had a third one, which I have now forgotten what it
was.
Mr. Duncan. Well, the third one was eliminating the EPA
approval of brownfield loans.
Ms. Bodine. In the RLF process, those loans are issued by
the State or local RLF programs. EPA's role should be to make
sure that they have a good program, and not to review every
loan.
Mr. Duncan. Mr. Philips, what do you think about that
trending in the other direction, towards more reporting on the
actual results or accomplishments that Ms. Bodine just referred
to?
Mr. Philips. Well, just starting with Ms. Bodine's first
comment regarding the rolling applications, I think there may
be some logistical ways to overcome the complexity associated
with having a rolling. Other programs in Federal Government
allow sort of an objective scoring opportunity, and there could
be an allocation for different periods of time. Even if it is
not rolling, you could break it out and there could be an
allocation of capital for each of those. So there may be ways
to get around that.
There was another.
Mr. Duncan. Well, when she said that they are trending
towards more reporting being required on the actual results
instead of just the assessment and the cleanups and so forth.
In other words, as I understand it, what you are talking about,
you are requiring more information on the end, as far as the
results, rather than on the beginning?
Ms. Bodine. We are proposing to do that, yes, that is
accurate. What we require now is number of properties assessed,
number of cleanups.
Mr. Philips. I think that is a great trend. We would like
to see more of that. We would like to see some objective
performance metrics on the back end that may be tied to maybe
recapture, even. In other words, if you don't perform up to a
certain point, if you don't eliminate the pollution or if you
don't remediate appropriately or if you don't redevelop to
create enough jobs or enough new tax revenue, then maybe some
of that money is recaptured. So that would be an important way
to, because we really are not, we can improve in the way we are
looking at the results of some of these projects.
Mr. Duncan. Well, I have got many other questions,
including questions about so-called mothballed sites, many
other things, but, unfortunately, they are going to have to be
submitted to you for inclusion within the record, because you
just heard the second buzzer go off and we have got to go to
the floor for some votes.
But I will tell you this: there is a lot of interest in
this, and you have been a very informative, very interesting
panel, and I certainly appreciate your assistance on this, and
will appreciate also your further submission of answers and
materials for the record of this hearing. But that will
conclude the hearing at this point.
[Whereupon, at 11:45 a.m., the subcommittee was adjourned.]
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